SEC Filings

Costco Recovers Part Of $500 Million Tariff Bill, Still Faces Four March Class Actions Over The Refunds, And Margin Still Slipped

The 10-K shows refunds of $184 million in fiscal 2026 and $155 million since, while gross margin eased to 11.09% from 11.12%.

Matteo Parrino Jonathan Ponciano

Matteo Parrino, Jonathan Ponciano

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Costco Recovers Part Of $500 Million Tariff Bill, Still Faces Four March Class Actions Over The Refunds, And Margin Still Slipped

Costco paid about $500 million in IEEPA tariffs and is now getting money back, but four class actions say members, not the company, should receive it. The 10-K filed Wednesday also shows gross margin down three basis points, even with the refunds counted.

What the 10-K says about the refunds

The company received $184 million in refunds and interest during fiscal 2026 and a further $155 million after the year ended, according to the 10-K. It says it plans to reinvest most of the refunds in lower prices for members.

Costco recognized the refunds only as they were realized, treating them as gain contingencies, meaning potential gains booked only once certain. The filing adds that some refunds may be delayed for a small share of transactions while the government processes corrections.

Gross margin was 11.09%, down three basis points (0.03 percentage points) from 11.12%. Net tariff refunds added three basis points to that figure. The prior annual filing had reported a 20 basis point increase.

The lawsuits claiming the money

Members filed four class actions in March 2026 demanding the tariff money back, arguing higher prices carried the cost to them; the suits appeared in the quarterly report filed June 3. Plaintiffs plead state consumer-protection claims and equitable theories. They are Stockov (N.D. Ill.), Gower (King County Superior Court), Ortiz (D.P.R.) and Briggs (W.D. Wash.).

The Gower court denied Costco's motion to dismiss on July 17, 2026, the 10-K says. A motion seeking discretionary appellate review of that ruling is pending.

Mix, not tariffs, drove the margin

Gasoline and pharmacy grew faster than core merchandise this year. The 10-K says that mix shift and credit-card reward costs pulled core categories down 11 basis points. The refunds land against that backdrop, and the company says most will go back into prices rather than margin.

Separately, the filing shows Costco renewed its U.S. revolving credit facility in August 2026, raising capacity to $1,000 million from $400 million, with maturity extended to August 2027.

What to watch

The pending appellate-review request in Gower is the next legal marker. The other is whether refunds beyond the $155 million received after year-end arrive and are put into prices.

The 10-K leaves the same refund money claimed by both the company's pricing plans and the plaintiffs' complaints.

Correction, October 8, 2026: An earlier version of this story's headline implied the tariff-refund class actions were new. The four suits were filed in March 2026 and first disclosed in Costco's June 10-Q.

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